With crumbling infrastructure and a proposed sports complex on the horizon the City of Vicksburg needs to make smart decisions about a list of proposed capital improvement projects.
Street paving totaling $10 million tops the projected $17.6 million list under consideration by the Board of Mayor Aldermen.
The list is about $100,000 more than the original $17.5 million capital improvements project proposed by the board in December. The board, City Attorney Nancy Thomas and City Accounting Director Doug Whittington discussed the list and possible financing at a Monday afternoon work session.
The city currently has an A2 bond rating and a current debt limit of $48 million. Moody’s Investment Services, a New York-based provider of credit ratings and risk analysis restored the city’s rating in July, more than two years after pulling the city’s credit rating because of incomplete audit reports going back to 2008.
If the board plans to spend the full $17.6 million, Whittington said, Demery Grubbs, a former Vicksburg mayor who works with Governmental Consultants, recommended the city borrow $18 million to cover the cost of issuing the bonds.
“I believe we can get it (the loan) at 3 percent interest,” Mayor George Flaggs Jr. said. “We will be able do this (borrow the money) without raising millage. It’s going to require us to prioritize our spending and our hiring.”
If the city borrows $18 million for capital improvements and the additional $20 million that has been proposed for a sports complex that would leave $10 million under the debt limit.
At a Dec. 19 meeting, the city’s capital improvements committee agreed to postpone a proposed $25 million utilities improvements program until 2016.
It is never a wise idea to max out one’s credit and the city runs that risk unless it sets priorities for projects and delays those that can be put off.
“The (priority) list looks good,” Flaggs said, recommending the board borrow the full $18 million and spend $9 million “during this administration” and the other $9 million later.
However, Thomas reminded the board it would have deadlines for borrowing and spending the money.
“The main thing that we have to remember is this, from the day we adopt the intent resolution, we’ve got 24 months to issue the bonds,” she said. She said it will be up to the board to determine how much it wants to spend, “but you have to borrow all the money you’re going to borrow within 24 months without doing another intent resolution.”
Once the money is borrowed, she said, the board has three years to spend it.
Three years to spend it and how many years to pay it back?
The city doesn’t need to sell it’s fiscal future for shortsighted projects, it should approach the capital improvements list and loans with caution. Taxpayers demand wise spending and borrowing.